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When the stock market is range-bound, and the conversational framework grows repetitive, a line from a Violent Femmes song always comes to mind: "Third verse, same as the first."

Here, at the end of the third-quarter earnings season, market action is about the same as it was in the first. Nothing has really changed, and nothing will change until it's clear the U.S. economy won't go over the fiscal cliff.

The market's big issues are still big issues. Corporate sales growth remains a big concern, as does a global economic slowdown. The sameness should help agitated investors calm down and ignore the noise, which is to say information without any economic value. They can rest easier knowing the market is in a similarly coiled resting state–waiting for the cliff to be scaled.

Investors are still buying stocks, looking for event-driven opportunities and dividends. This is why correlation, which measures the propensity of all stocks to move together, is muted despite the fiscal cliff.

Many investors are hedging portfolios in case Washington fails to compromise on tax hikes and spending cuts before Dec. 31, plunging the U.S. economy into recession.

The prudent action remains that of hedging your portfolio, should partisan Washington push the economy off the cliff and into recession. (See Barrons.com, Nov. 26, The Striking Price, "Stand Back from the Cliff.")

My colleague, Randall W. Forsyth, il miglior fabbro, recently advised readers that it would be a mistake to just forget about the cliff. (See Barrons.com, Nov. 28, Up and Down Wall Street Daily, "The Biggest Risk: Complacency Over Fiscal Cliff.") He's right. Hedge stock portfolios with options on
SPDR S&P 500 ETF Trustspy -0.5967262606726732%SPDR S&P 500 ETF TrustU.S.: NYSE Arca210.725
-1.265-0.5967262606726732%
/Date(1425412005632-0600)/
Volume (Delayed 15m)
:
64279593
P/E Ratio
N/AMarket Cap
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Dividend Yield
2.1530101345631336% Rev. per Employee
N/AMore quote details and news »spyinYour ValueYour ChangeShort position
(SPY), or even with VIX calls, to offset a sharp decline in the market should the cliff not be averted. Look at puts that would increase in value if the stock market fell 5% or 10% over the next one to three months. The same metric works for VIX calls.

Regardless of the fiscal cliff and the specter of rising dividend taxes, buy stocks that have reliable payouts. Dividends make up 45% of historical stock returns. Own those stocks in tax-advantaged accounts.

THE HOTTEST STORY ON WALL STREET is the trouble swirling around legendary hedge-fund manager Steve Cohen, and SAC Capital. Federal prosecutors are after him. One of his ex-traders, Mathew Martoma, was charged with conspiracy to commit securities fraud. The SEC has told SAC that enforcement actions could be pending.

Beyond the prurient interest is something Cohen apparently said about Martoma, who made SAC $276 million trading two pharmaceutical stocks. Cohen allegedly called Martoma a "one-trick pony." (The federal complaint doesn't identify the author of the pony crack as Cohen, only as a hedge-fund officer and firm founder.)

Peter Lynch, a fabled mutual-fund manager, liked stocks that he thought could rise 10-fold over many years. Lynch's idea seems quaint if a one-trick pony can make a $9 million annual bonus.

Targeting investors, big and small, seems myopic as long as the game is fundamentally geared to reward quick, bold trades, and Washington seems more interested in taxing behaviors than developing a regulatory framework to keep the herd of ponies from running over ethical cliffs.